July 17, 2013 / 1:42 PM / 5 years ago

Ecobank sees no risk of default on chairman's debt

LAGOS, July 17 (Reuters) - Pan-African lender Ecobank Transnational (ETI) said on Wednesday that debts owed by businesses associated with its chairman were performing and there was no doubt they would be repaid.

Ecobank spokesman Jeremy Reynolds said companies linked to chairman Kolapo Lawson owed the bank 1.6 billion naira ($10 million and a further 1.4 billion naira of borrowings had been sold to the state bad bank AMCON.

“So there is no question of him not settling debt,” Reynolds said by phone. He said the debt owed to Ecobank was recently rated by the Nigerian Deposit Insurer (NDIC) as “performing”.

The Financial Times reported late on Tuesday that the bank was caught up in bitter boardroom squabbles about the borrowings and that the lender’s leadership faced a crisis of confidence among some shareholders.

The FT said it had seen documents showing that the central bank notified Ecobank in April of Lawson’s failure to make good on promises to repay the loans passed to AMCON.

Lawson could not be reached by Reuters for comment and a central bank spokesman said AMCON and Ecobank were better placed to comment on the FT report. AMCON declined to comment on the basis of confidentiality.

Renaissance Capital repeated its “buy” rating on Ecobank with a price target of 18.8 naira per share, saying the loan issue was insignificant compared with the bank’s fundamentals.

“The $10 million loan represents 0.3 percent of Ecobank Nigeria’s first quarter loan book,” Rencap analysts said.

ETI shares, which have risen 33 percent this year, were flat at 15 naira per share by 1130 GMT.

In 2009, Nigeria’s central bank had to inject $4 billion to support nine banks after reckless lending left them so undercapitalised that they posed a threat to Africa’s second largest economy and top oil exporter.

Reynolds said the debt issues were discussed at board level and no attempt has been made to write off the loans. He said the central bank had written to enquire about the loans and Ecobank had cooperated fully with the regulator’s requests.

Since 2009, a number of banks have been restructured, and AMCON, the Asset Management Company of Nigeria, set up in 2010 to help recapitalise lenders following the bailout, has absorbed the toxic assets. ($1 = 161.1750 naira) (Reporting by Chijioke Ohuocha; Editing by David Cowell)

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